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RELEVANT INFORMATION USED IN THE DETERMINATION OF THE NATIONAL TRASNSMISSION CHARGES FOR THE

TARIFF PROPOSAL REFERRED TO YEAR 2019

Document prepared by Snam Rete Gas S.p.A. in compliance with art. 23.9 of Resolution no. 575/2017 / R / GAS of the Regulatory Authority for Electricity Gas and Water.

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INTRODUCTION

In compliance with Article 23.9 Annex A of the Resolution 575/2017/R/GAS by the

Regulatory Authority for Electricity Gas and Water, Snam Rete Gas makes available

the relevant information used in the determination of the unit charges for the national

gas network.

The unit charges for the national network are derived according to the provisions of the

Regulatory Authority for Electricity Gas and Water defined in Annex A of Resolution

575/2017/R/GAS (RTTG) and on the basis of the following procedural steps:

1. NATIONAL GAS TRANSMISSION NETWORK AND DEFINITION OF THE

ENTRY AND EXIT POINTS;

2. SIMULATION OF THE GAS FLOWS IN THE NETWORK AT PEAK

CONSUMPTION CONDITIONS;

3. DETERMINATION OF THE UNIT TRANSPORTATION COST ON THE BASIS OF

THE TRANSPORT CAPACITIES AS FUNCTION OF THE PIPES DIAMETER;

4. DETERMINATION OF THE “EXTENDED” ENTRY/EXIT MATRIX;

5. DETERMINATION OF THE “SYMPLIFIED” ENTRY/EXIT MATRIX;

6. CALCULATION OF THE ENTRY/EXIT CHARGES (CPe e CPu);

7. ALLOCATION OF OWN CONSUMPTIONS AT ENTRY POINTS.

1. NATIONAL GAS TRANSMISSION NETWORK AND DEFINITION OF

THE ENTRY AND EXIT POINTS

The perimeter for the application of the entry/exit charges calculation procedure is

represented by the National Network, which is yearly defined by the Ministry of the

Economic Development pursuant to Article 9 of the Legislative Decree 23 May 2000,

no. 164. The National Network is updated to take into account also the network

structure expected to be operational in 2018.

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Definition of the Entry Points

For year 2019, the following 84 entry points into the National Network have been

defined:

n. 5 entry points at the interconnections with import foreign pipelines located in

the proximity of Mazara del Vallo, Passo Gries, Tarvisio, Gorizia and Gela;

n. 3 entry points at the interconnections with the LNG regasification plant of

Panigaglia, with the LNG regasification plant of Porto Viro located at Cavarzere

and with the LNG regasification plant of OLT di Livorno;

n. 59 entry points in the location of the delivery points from national gas

production fields. For tariff purposes the entry points from national production

have been grouped into 10 homogeneous territorial areas; consequently, 10

different values of CPe unit charges have been identified, in line with the the

previous regulatory period;

n. 14 entry points in the location of the delivery points of gas from biomethane

production plants, not included in the reference map, combined to the 10 values

of CPe unit charges analogously to the national productions;

n. 3 entry virtual hubs, one for each storage operator (Stogit S.p.A., Edison

Stoccaggio S.p.A. and Ital Gas Storage S.p.A.). For tariff purposes, it was

considered a single unit entry charge for storages as provided for in paragraph

12.1.c of the RTTG.

Definition of the Exit Points

For year 2019, the following 14 exit points from the National Network have been

defined:

n. 6 Consumption Areas distributed throughout the country;

n. 5 exit points for gas export in the location of Gorizia, Bizzarone, San Marino,

Passo Gries and Tarvisio;

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n. 3 exit virtual hubs, one for each storage operator (Stogit S.p.A., Edison

Storage S.p.A. and Ital Gas Storage S.p.A.). or tariff purposes, it was considered

a single unit exit charge for storages as provided for in paragraph 12.1.c of the

RTTG.

The 6 Consumption Areas have been defined on the basis of the tariff geographical

areas for the gas distribution service identified by the Delibera ARG/gas n. 159/08 and

confirmed with Delibera 573/2013/R/GAS:

NOC – North-West Area, comprising Valle d’Aosta, Piemonte and Liguria Regions;

NOR – North-East Area, comprising Lombardia, Trentino – Alto Adige, Veneto,

Friuli - Venezia Giulia, Emilia – Romagna Regions;

CEN – Central Area, comprising Toscana, Umbria and Marche Regions;

SOR – Central-South Area, comprising Abruzzo, Molise, Puglia, Basilicata Regions;

SOC – Central-South Area, comprising Lazio and Campania Regions;

MER – Southern Area, comprising Calabria and Sicilia Regions.

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2. SIMULATION OF THE GAS FLOWS IN THE NETWORK AT PEAK

CONSUMPTION CONDITIONS

Every year it is defined the scenario for the evaluation of the gas flow in the peak demand with

reference to the intakes and offtakes forecasted for the winter period, usually a working day of the

second week of January. In particular the referred scenario is the day of maximum demand, that is

represented by a working day of the second week of January in normal winter conditions.

Gas transportation in the network is analyzed by means of hydraulic simulations performed using

simulation system, developed “ad hoc” for meshed network like Snam Rete Gas network and it

allows to:

a) create a model of the network consisting of sections of gas pipeline and calculation points

corresponding to physical elements such as main nodes connecting pipelines, detachment

points of off-takes or distribution networks, changes in diameter, significant variations of

elevation profile of the pipelines. Calculation points are also set at the inlet and outlet of

compressor stations and at the entry points interconnected with import pipelines or main

production fields;

b) create a model for the compressor stations based on the application of the control criterion

characteristics of the station for distribution of the rate flow between the units; realistic

simulation of the operating point of compressors and turbines, using a mathematical model

that describes the characteristic curves of each individual machine obtained from the field

measurements (where available) or the expected curves provided by the manufacturers; this

simulation provides quite an accurate determination of the operating range of the plants

based on the actual limit curves (antisurge, minimum and maximum number of revolutions,

maximum power);

c) simulate the network to calculate the following parameters, by solving a system of

transportation equations on the basis of formulae and models recognized by scientific

literature and the technical gas associations:

pressure, temperature and composition of the gas at the calculation points;

flow rate and composition of the gas in every section of the gas pipeline;

operating points of the compressor stations;

operational parameters in particular elements (compressor stations, valves, imports,

national productions, storages, offtakes).

The calculation models used adopt the following main basic equations:

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Pessure drop calculation Fergusson equation

Equation of state for calculation Z and

derived factors Redlich-Kwong equation

Calculation of friction factor Colebrook equation

Calculation of viscosity Dean-Stiel method

The target of the hydraulic simulation consists of defining the predominant flows, that is the

characterization, in each section of the national network, of the predominant gas flows in the scenario

of maximum demand above described; such flow distribution in each section of the network allows

to:

- define, for each possible path of gas from an entry point to an exit point of the national

network:

o sections in accordance to the flow (where the path of gas has the same direction of

the predominant flow) to which is given a transportation cost equal to 100% of the

transportation cost per unit;

o sections in counter-flow (where the path of gas has the opposite direction of the

predominant flow) to which is given, instead of the entire cost, a reduced

transportation cost (14%) of the transportation cost per unit;

- calculate the weighted average if an entry point and an exit point are composed of

respectively more than one delivery and redelivery points; this activity allows to pass from

the large matrix to the reduced matrix.

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Pineto

Rubic.

Miner.

Corte

Ripal.

Brugh.

Sergn.

528

531 530525

524 388

398

458

395

454

301456

397

371

369

347

348

402

465

401 366

351

392157

45

72

44

52

12659

99 103

89

100

259

42

91 90

1

37 268

92

261

128 95

180

34

16413

23235

198

163

462

Gagliano

312

63

243

110

73

167 187

200

122 121

340

344

303

202

323

321

339

330

315

389 414

341

472

476

473

400

391

399

384

98

SCHEMATIZZAZIONERETE NAZIONALE GASDOTTI

FLUSSI DOMINANTI

2019

93

214

86

204207208

102

225

239

717

Cellino

Collalto

193

76

115

S.Gior.

349

345

Falconara

Fano

MonteAlpi

RavennaMare

Casalb.

S.Sal.

Settala

438405

441

396

Grotta-mare

334

Cand.

385

460

Crotone

437

325

267

553

HeraLacinia

278

517

Sabb. 1ADR25

357415

2SGI

3SGI

4SGI

Castel Bolognese

Bordolano

5SGI

NOR

NOC

CEN

SORSOC

MER

7SGI

6SGI

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3. DETERMINATION OF THE UNIT TRANSPORTATION COST ON THE

BASIS OF THE TRANSPORT CAPACITIES AS FUNCTION OF THE

PIPES DIAMETER

The national pipeline network is schematized in:

‒ important nodes or points of interception and derivation (hereinafter: PIDIs),

which are the physical points of the network that correspond to interconnection

points or important points of withdrawal;

‒ network elementary sections, ie the network sections comprised between two

PIDIs, characterized by a length and a diameter.

To each elementary network section is associated a unit transport cost according to the

considered length and diameter.

The unit transport cost of each section is calculated by applying the following formula:

CT=IS * (α + β +γ) / QT

where:

• CT is unit transport cost, expressed in €/cm/day/km;

• IS is the specific cost, expressed in €/km and depending in function of the pipe

diameter;

• α, β and γ are parameters used to attribute to one single year the specific investment

costs and they represent respectively the return on invested capital, the depreciation

and the operating costs.;

• QT is the theoretical capacity of the pipe, expressed in cm/day, and determined

according to the following simplified formula:

KL

PPQT

*

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• P1 is the initial pressure of the pipeline section;

• P2 is the final pressure of the pipeline section;

• L is the length of the pipeline;

• K is a constant function of the diameter, the gas specific weight, the temperature,

è una costante in funzione del diametro, del peso specifico del gas, della temperatura,

the friction coefficient and the compression coefficient.

For the determination of the theoretical capacity QT, it is made reference to Colebrook-

White diagrams for medium-big size diameters and to Weymouth diagram for medium-

small size diameters. For the calculation of the theoretical capacity QT as function of

the diameter, it is assumed a square pressure drop ΔP2/km equal to 15 bar2/km,

generally adopted in the sector technical literature.

The transport cost for each section is directly proportional to the pipeline lenght; to

calculate the transport cost of a section of L length, the unit transport cost is multiplied

by the length L of the pipeline.

4. DETERMINATION OF THE “EXTENDED” ENTRY/EXIT MATRIX

For the determination of the extended entry/exit matrix, a unit transport cost Ci,j

(€/cm/day)is associated to each combination of entry point and PIDI. Such unit

transport cost is calculated as the sum of the unit transport costs referred to the series

of network sections which constitute each entry-PIDI combination, calculated as

previously explained.

For the purpose of identifying the paths from each entry point to each exit point it is

used the minimum cost criteria. This means that for each of the possible alternative

paths between each entry and exit points the unit transport cost is calculated as sum of

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the costs of each elementary section which is part of the path and for the purpose of the

matrix calculation the path with the minimum cost is considered.

5. DETERMINATION OF THE “SIMPLIFIED” ENTRY/EXIT MATRIX

The determination of the simplified entry/exit matrix is made by aggregating the PIDI

of each consumption or exit area, by calculating the weighted average of the transport

costs in function of the flows exiting from each PIDI of the area.

For the current regulatory period six areas have been considered in line with the

territorial areas defined by the Regulator for the distribution service.

In the table below the values representing the relative weights of the costs associate to

each path have been normalized.

NOCNord

Occidentale

NORNord Orientale

CENCentrale

SORCentro-sud Orientale

SOCCentro-sud Occidentale

MERMeridionale

S. SALV0 SABBIONCELLO M INERBIO SERGNANO SETTALA BRUGHERIO RIPALTA CORTE COLLALTO CELLINOCASTEL

BOLOGNESEBORDOLANO

SVIZZERA -

BIZZARONE

SLOVENIA -

GORIZIAR.S.M ARINO PASSO GRIES TARVISIO

Mazara del Vallo 1,000000 0,888257 0,877145 0,729039 0,742245 0,227144 0,610908 0,725058 0,705273 0,760008 0,778031 0,803940 0,762242 0,767035 0,767688 0,643374 0,716362 0,764400 1,071982 0,948616 0,923583 0,971553 0,875648 Gela 0,932614 0,820871 0,809758 0,661652 0,674858 0,173387 0,552956 0,667106 0,647320 0,702056 0,720078 0,745987 0,704290 0,709083 0,709735 0,585422 0,658410 0,706448 1,004596 0,881230 0,856197 0,904166 0,808261 Passo Gries 0,178850 0,181444 0,383433 0,398678 0,331560 0,404761 0,292151 0,149711 0,147051 0,127971 0,128041 0,153950 0,128139 0,132932 0,192341 0,324617 0,176806 0,132363 0,200725 0,279608 0,486719 - 0,206640 Tarvisio 0,366402 0,254160 0,480420 0,498721 0,431603 0,504803 0,378188 0,235254 0,233087 0,215114 0,233136 0,259045 0,217348 0,222141 0,139957 0,410654 0,262843 0,219506 0,438384 0,163459 0,535110 0,337955 - Gorizia 0,298796 0,185751 0,412814 0,431115 0,363996 0,437197 0,320047 0,177112 0,174946 0,156973 0,174995 0,200904 0,159207 0,163999 0,081816 0,352512 0,204701 0,161364 0,370778 - 0,467504 0,270348 0,022884 GNL Panigaglia 0,193997 0,102150 0,243439 0,259964 0,192846 0,266047 0,172857 0,047542 0,027757 0,082492 0,100851 0,126760 0,085062 0,050828 0,090172 0,205323 0,057512 0,086884 0,284564 0,160807 0,348005 0,184134 0,087838 GNL Cavarzere 0,266334 0,161949 0,300852 0,314108 0,246990 0,320190 0,219421 0,094105 0,074320 0,129056 0,147078 0,172987 0,131290 0,136083 0,136735 0,251887 0,104076 0,133448 0,338317 0,214951 0,402148 0,237887 0,141982 GNL OLT Livorno 0,266322 0,160485 0,104438 0,176154 0,109036 0,182237 0,100781 0,094094 0,074309 0,129045 0,147067 0,172976 0,131279 0,136072 0,136724 0,133247 0,070143 0,133436 0,338304 0,214938 0,330412 0,237874 0,141969 Hub 1 - Ripalta 0,113672 0,050639 0,234434 0,249679 0,182561 0,255762 0,164012 0,023228 0,018912 0,015956 0,015788 0,041697 - 0,004793 0,065858 0,196478 0,048667 0,020348 0,185654 0,132535 0,337720 0,085224 0,059566 Hub 2 - Ravenna 0,195847 0,085380 0,187221 0,205921 0,138803 0,212003 0,126380 0,033486 0,013701 0,068437 0,086459 0,112368 0,070671 0,075464 0,076116 0,158846 0,043457 0,072828 0,267829 0,144464 0,201933 0,167400 0,071495 Hub 3 - Rubicone 0,205380 0,094241 0,141052 0,158467 0,091349 0,164549 0,085570 0,041684 0,021899 0,076635 0,094657 0,120566 0,078869 0,083662 0,084314 0,118035 0,051655 0,081026 0,277362 0,153996 0,154478 0,176932 0,081027 Hub 4 - Falconara 0,243378 0,131635 0,135977 0,170949 0,103831 0,177032 0,096304 0,074363 0,054577 0,109313 0,127335 0,153244 0,111547 0,116340 0,116992 0,128770 0,065667 0,113705 0,315360 0,191994 0,166961 0,214930 0,119025 Hub 5 - Pineto 0,255572 0,143830 0,132717 0,160376 0,112126 0,189226 0,106792 0,084850 0,065065 0,119801 0,137823 0,163732 0,122035 0,126827 0,127480 0,003166 0,076154 0,124192 0,327554 0,204189 0,179156 0,227125 0,131220 Hub 6 - S.Salvo 0,290175 0,178433 0,167320 0,107629 0,110681 0,126861 0,000459 0,114609 0,094823 0,149559 0,167581 0,193490 0,151793 0,156586 0,157238 0,032924 0,105913 0,153951 0,362157 0,238792 0,213758 0,261728 0,165823 Hub 7 - Candela 0,363419 0,251676 0,240564 0,092135 0,182886 0,085144 0,063448 0,177598 0,157813 0,212549 0,230571 0,256480 0,214783 0,219575 0,220228 0,095914 0,168903 0,216940 0,435401 0,312035 0,287002 0,334972 0,239067 Hub 8 - Monte Alpi 0,501843 0,390100 0,378987 0,231034 0,244092 0,083858 0,182493 0,296643 0,276857 0,331593 0,349615 0,375524 0,333827 0,338620 0,339272 0,214959 0,287947 0,335985 0,573825 0,450459 0,425426 0,473395 0,377490 Hub 9 - Crotone 0,580655 0,468912 0,457800 0,309694 0,322900 0,066369 0,250271 0,364421 0,344636 0,399372 0,417394 0,443303 0,401606 0,406398 0,407051 0,282737 0,355726 0,403763 0,652637 0,529271 0,504238 0,552208 0,456303 Hub 10 - Gagliano 0,881689 0,769947 0,758834 0,610728 0,623934 0,134353 0,509161 0,623311 0,603525 0,658261 0,676283 0,702192 0,660495 0,665288 0,665940 0,541627 0,614615 0,662653 0,953672 0,830306 0,805273 0,853242 0,757337 San Salvo 0,290175 0,178433 0,167320 0,107629 0,110681 0,126861 0,000459 0,114609 0,094823 0,149559 0,167581 0,193490 0,151793 0,156586 0,157238 0,032924 0,105913 0,153951 0,362157 0,238792 0,213758 0,261728 0,165823 Sabbioncello 0,197909 0,094673 0,252452 0,266170 0,199052 0,272252 0,178194 - 0,033094 0,070211 0,088233 0,114142 0,072444 0,077237 0,077890 0,210660 0,062849 0,074602 0,269892 0,146526 0,354210 0,169462 0,073557 Minerbio 0,179916 0,075530 0,214433 0,227689 0,160571 0,233771 0,145101 0,019785 - 0,054736 0,072758 0,098667 0,056970 0,061763 0,062415 0,177567 0,029755 0,059127 0,251898 0,128532 0,315730 0,151468 0,055563 Sergnano 0,116269 0,048414 0,237032 0,252277 0,185159 0,258359 0,166246 0,021740 0,021145 - 0,018022 0,043931 0,002234 0,007027 0,064369 0,198712 0,050901 0,004391 0,188251 0,130804 0,340317 0,087822 0,057836 Settala 0,114692 0,059637 0,252092 0,267337 0,200219 0,273420 0,179198 0,036758 0,034097 0,015018 - 0,025909 0,015186 0,019979 0,079387 0,211664 0,063853 0,019410 0,184839 0,148267 0,355378 0,084410 0,075299 Brugherio 0,120129 0,064494 0,257529 0,272775 0,205656 0,278857 0,183874 0,041434 0,038774 0,019694 0,004676 0,001049 0,019862 0,024655 0,084063 0,216340 0,068529 0,024086 0,190277 0,153705 0,360815 0,089847 0,080736 Ripalta 0,113672 0,050639 0,234434 0,249679 0,182561 0,255762 0,164012 0,023228 0,018912 0,015956 0,015788 0,041697 - 0,004793 0,065858 0,196478 0,048667 0,020348 0,185654 0,132535 0,337720 0,085224 0,059566 Corte 0,144671 0,067535 0,234444 0,249690 0,182572 0,255772 0,164021 0,023237 0,018921 0,054992 0,054824 0,080733 0,039036 0,004802 0,065867 0,196487 0,048676 0,059384 0,231044 0,132546 0,337730 0,130615 0,059577 Collalto 0,332307 0,223797 0,446325 0,464626 0,397507 0,470708 0,348866 0,205932 0,203765 0,185792 0,203815 0,229723 0,188026 0,192819 0,076411 0,381332 0,233521 0,190184 0,404289 0,184602 0,501015 0,303860 0,111634 Cellino 0,281868 0,170494 0,158203 0,186396 0,138421 0,215522 0,129406 0,107464 0,087679 0,142415 0,160437 0,186346 0,144649 0,149441 0,150094 - 0,117434 0,146806 0,353850 0,230484 0,205451 0,253421 0,157515 Castel Bolognese 0,185314 0,080258 0,182265 0,193644 0,126526 0,199726 0,115822 0,024428 0,004642 0,059378 0,077400 0,103309 0,061612 0,066405 0,067057 0,148288 0,000477 0,063770 0,257296 0,133930 0,321128 0,156866 0,060961 Bordolano 0,154559 0,065630 0,232892 0,247158 0,180040 0,253240 0,161844 0,018910 0,016743 0,032930 0,050952 0,076861 0,035163 0,039956 0,061540 0,194310 0,046499 0,001562 0,226542 0,127514 0,335199 0,126112 0,054545

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6. CALCULATION OF THE ENTRY/EXIT CHARGES (CPe e CPu)

The last step is related to the calculation of the unit charge values in each entry and exit

point such as to minimize, respecting the constraints defined by Delibera

575/2017/R/gas, the sum of the squared differences between the CPi and CPj charges

and the unit transport costs Ci,j identified for each path from each entry point I to each

exit point j.

In mathematical terms it means the application of the following minimization criteria:

∑ , 2

The constraints to be considered in solving the calculation algorithm are the following:

‒ The exclusion of those solutions where the charges have a negative value;

‒ The allocation of 40% of the allowed revenues to entry points and 60% of the

allowed revenues to exit points;

‒ The difference among the unit charge values of adjacent exit points cannot

exceed 30% of the national average value of CPu charges;

‒ The unit charges multiplied for the capacities which are expected to be booked

shall be equal to the reference revenues allocated to the national network.

13

The following table shows the adjusted and final tariffs respecting the constraint on the

allowed revenues and with an attribution of 40% of the revenues at the entry points and

60% of the revenues to the exit points as well as in the application of the constraints

described above.

Mazara del Vallo 3,797131 NOC

Nord Occidentale 2,281723

Gela 3,454935 NOR

Nord Orientale 1,787898

Passo Gries 0,690045 CEN

Centrale 2,281723

Tarvisio 1,146643 SOR

Centro-sud Orientale 2,148134

Gorizia 0,798560 SOC

Centro-sud Occidentale 1,787898

GNL Panigaglia 0,285901 MER

Meridionale 1,654308 GNL Cavarzere 0,578877 S. SALVO 1,050796 GNL OLT Livorno 0,349267 SABBIONCELLO 0,325066 Prod Naz. - Hub 1 0,092522 MINERBIO 0,162135 Prod Naz. - Hub 2 0,131684 SERGNANO 0,609807 Prod Naz. - Hub 3 0,092522 SETTALA 0,800137 Prod Naz. - Hub 4 0,233335 BRUGHERIO 1,153076 Prod Naz. - Hub 5 0,252999 RIPALTA 0,608597 Prod Naz. - Hub 6 0,344684 CORTE 0,639150 Prod Naz. - Hub 7 0,670955 BORDOLANO 0,646963 Prod Naz. - Hub 8 1,328570 COLLALTO 0,736631 Prod Naz. - Hub 9 1,709427 CELLINO 1,368150 Prod Naz. - Hub 10 3,196717 CASTEL BOLOGNESE 0,459614 S. SALVO 0,344684 SVIZZERA 3,598777 SABBIONCELLO 0,261344 SLOVENIA (Gorizia Esp.) 1,891253 MINERBIO 0,135829 R.S.MARINO 3,645859 SERGNANO 0,092522 PASSO GRIES 2,107685 SETTALA 0,107527 TARVISIO 0,845674 BRUGHERIO 0,128160 RIPALTA 0,092522 CORTE 0,136654 BORDOLANO 0,113455 COLLALTO 1,012839 CELLINO 0,385927 CASTEL BOLOGNESE 0,101383

TARIFFE 2019 -ScalateENTRY EXIT

14

7. ALLOCATION OF OWN CONSUMPTIONS AT ENTRY POINTS

The specific percentages to cover own gas consumptions (fuel gas and line

consumptions) are determined attributing the compressor stations to each entry point,

proportionally to the injected volumes as resulting from the company budget.

The estimated gas amount for year 2019 to cover own gas consumptions in comparison

to the total gas amounts forecasted in injection at entry points of the national network

is equal to 0,511173%. This value will be applied to all entry points of the national

network according to the provisions of article 14.1 RTTG of the Delibera

575/2017/R/gas.

M Smc γFuel*

Autoconsumi 359,11 0,511173%

Immessi 2019 70.253,08